Forex News: U.S. Dollar Falls As U.S. Recession Fears, Fed

U.S. Dollar Falls As U.S. Recession Fears, Fed Rate Cut Bets

(RTTNews) - The U.S. dollar weakened against other major currencies in the early European session on Wednesday, amid declining confidence in the U.S. economy and rising speculations that the Federal Reserve (Fed) will shortly start a new cycle of rate cuts.

Traders speculate that the Fed will shortly start a new rate cut cycle and slash borrowing costs by 100 basis points in 2025.

Amid worries about a U.S. recession and the intensifying US-China trade war, the immediate response to U.S. President Donald Trump's decision last week to halt sweeping reciprocal tariffs for 90 days was brief.

Traders wait for Fed Chair Jerome Powell's speech due later during the U.S. session for cues about the rate-cut path.

In the European trading today, the U.S. dollar fell to a 6-1/2-month low of 1.3289 against the pound and a 5-day low of 142.11 against the yen, from early highs of 1.3230 and 143.18, respectively. If the greenback extends its downtrend, it is likely to find support around 1.35 against the pound and 141.00 against the yen.

Against the euro and the Swiss franc, the greenback dropped to 2-day lows of 1.1385 and 0.8129 from early highs of 1.1293 and 0.8208, respectively. The greenback may test support near 1.15 against the euro and 0.80 against the franc.

The greenback edged down to 1.3924 against the Canadian dollar, from an early low of 1.3960. On the downside, 1.43 is seen as the next support the 1.43 region.

Looking ahead, U.S. mortgage approvals data, U.S. retail sales data for March, industrial and manufacturing productions for March, business inventories for February, U.S. NAHB housing market index for April and U.S. EIA crude oil data are slated for release in the New York session.

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